OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: StarHub
Company Name: STARHUB LTD

Research House: Nomura

Price Call: SELL

Target Price: 3.30

Stock Name: Hyflux
Company Name: HYFLUX LTD

Research House: DBS Vickers

Price Call: HOLD

Target Price: 1.43

Stock Name: Genting HK US$
Company Name: GENTING HONG KONG LIMITED

Research House: UOB KayHian

Price Call: HOLD

Target Price: 0.41

Market Compass

13 May 2013~ Good Morning Singapore!

Singapore Idea Snippets:

13 May 2013~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : Formal education will make you a living; self-education will make you a fortune. - JIM ROHN Singapore: The Day Ahead SINGAPORE DAYBOOK:Reits alone not to blame for retail woes [SINGAPORE] Real estate investment trusts (Reits) in the retail sector are often blamed for pushing up rentals and consumer prices, but market watchers say it's not such a straightforward situation. And retail Reits may face challenges of their own going forward. Some retailers have highlighted the problem rising rentals pose to businesses, especially the smaller ones. At the recent World Retail Congress Asia Pacific, reports cited the Singapore Retailers Association (SRA) noting a growing Reit market as one of the factors behind the higher rentals. Reits generally have strong pricing power because they own most of the prime malls in Singapore, Alan Cheong, head of research at Savills Singapore said. "The profit maximisation motive is driving them to try to max out the yields for the shareholders. And then they will be very tough on their end of the bargaining table against the retailers." In return for securing a prime spot, retailers have to accept the trade-off. MARKET SCOOP Straco Q1 net profit triples Hotel Royal Q1 net profit down 4.7% Best World post Q1 profit of $962,000 Lee Kim Tah Q1 profit nearly trebles Boardroom Limited Q3 profit falls 18.5% UOL's Q1 net profit falls 15% UOL offers S$2.55 per Pan Pacific Hotels share in exit offer Pan Pacific Hotels Q1 net profit down 45% NOMURA Securities says... STARHUB | REDUCE | TP: S$3.30 StarHub's 1Q revenues, EBITDA and NPAT were +/-3% of our and market forecasts. Service revenues of SGD547mn were flat y-y but down 3% q-q EBITDA and NPAT rose 3-4% each y-y and q-q, with 33% margin In the wireless business, StarHub added 17k subs to a total of 2.2mn subscribers, while in broadband, the net adds were zero and in pay-TV it lost another 4k subs Wireless ARPUs (which were restated to exclude inbound roaming) have been flat to declining for the past 2-3 quarters despite the recent data repricing initiatives NBN issues continue in fixed services, where revenues have been in the SGD80-95mn range per quarter for the last three years now Management also stated that competition is high in this segment which is putting pressure on ARPUs Management has reduced its FY13 revenue guidance slightly from 'single-digit' revenue to 'low single-digit revenue' It has maintained its EBITDA margin guidance to around 31% despite it being 33% in 1Q StarHub's long-standing CFO, Kwek Buck Chye, is retiring after 11 years in the role One key appeal of StarHub, which is hard to match, is its S5c absolute dividend every quarter (4.2% yield), and one of the reasons for its share price strength we believe DBS VICKERS Securities says... HYFLUX | HOLD | TP: S$1.43 1Q13 net profit of S$8m came in slightly below our S$9m forecast Sales declined 10% y-o-y to S$124.5m but net profit rose 5% Adjusted net margins of 6% were stable y-o-y despite lower sales, largely because of effective cost management EPC for Tuaspring has pushed Asia ex-China (largely Singapore) to 87% of sales from 67% previously Net gearing rose to 0.7x from 0.6x in Dec due to higher borrowings taken to support Tuaspring execution Tuaspring is on track to commence operations in July while Magtaa has started operating Deducting 1Q13 revenue, we estimated Hyflux's EPC orderbook is c.S$875m including Dahej Hyflux's recurring income consists of O&M fees, asset returns and membrane sales Of these, O&M fees and asset returns form the bulk but it is still small at this juncture as bigger projects like Tuaspring and Magtaa have yet to contribute meaningfully Positive industry trend bodes well for Hyflux but near term performance may be slow as orderbook is depleting Hence, we maintain Hold with unchanged TP at S$1.43 UOB KAY HIAN says... GENTING HONG KONG | HOLD | TP: US$0.41 Genting Hong Kong (GENHK's) 50% JV, Travellers International, has filed a draft prospectus with the Philippine Stock Exchange for a proposed IPO Details of the IPO - namely the number of shares to be offered, offer price and any pre-transaction reorganization are yet to be finalized An IPO of Travellers has been anticipated since the listing of NCL early this year, and there has been recent speculation that a corporate reorganization may split two IRCs (Resorts World Manila and Resorts World Bayshore) into separate entities Floating Travellers now would be positive for GENHK, to capitalize on the upbeat sentiment over the Philippines' gaming market potential As an indication of trading range, an optimistic valuation of GENHK would place the SOTP at around US$0.60 This takes into account NCL's present market cap of US$6.5b (ie no discounts imputed) and Bloomberry's US$3b market cap We understand that PAGCOR and its licensees are in discussions on how to address the tax position in a manner that would be equitable and remain supportive of the industry Separately, we understand that RWM has had a good 1Q13 with record daily win rates, despite the introduction of competition with Solaire Manila's opening in March Nevertheless, we are still mindful over RWM's outlook - in the immediate term, as Solaire steps up its VIP marketing efforts, and in the longer term, how it will compete with the IRCs at ECM, which will likely be the natural gaming hub in Manila Maintain HOLD and US$0.41 target price on GENHK for now, pending details of Travellers' IPO, and clarity on the tax position of PAGCOR licensee companies